QMS (Quality Meat Scotland)

QMS (Quality Meat Scotland) April 2015

Pigs

Prices and Supplies

Farmgate pig prices finally showed some signs of stabilising in March after a prolonged period of decline. Indeed, having opened the month at 132.7p/kg dwt, the SPP averaged 132.6p/kg in the final week of March. During February, prices had fallen by 6p/kg (4%). Despite steadying, prices remain around 18-19% lower than a year ago. Historically, prices have tended to pick up through the spring and into summer as supplies tighten.

In the market for weaners, prices have been more stable during the first quarter of the year than in the finished market. This may have been influenced by producer expectations of a seasonal increase in prime pig prices. Industry sources have also suggested that supplies of 30kg weaners have begun to tighten up. Even so, prices have remained a fifth lower than last spring.

Once again, UK abattoirs proved well supplied with prime pigs in February. Throughput was up by more than 4% year-on-year at 815,800 head and was at a 13-year high for the month. In Scotland and E&W, slaughterings rose 3.5% while NI plants handled 6.5% more prime pigs.

Though the average carcase weight at UK abattoirs for prime pigs dipped back half a kilo on the month, at 82.3kg, it remained well above year earlier levels. When added to the rise in throughput, the 1.5% (1.1kg) increase in carcase weights resulted in prime pigmeat production rising nearly 6% year-on-year to 67,200t in February.

A 3.5% year-on-year increase in prime pig slaughterings at Scottish abattoirs took numbers to 24,050 head in February. Nevertheless, supplies still trailed February 2013 levels.

The total volume of pigmeat produced by UK abattoirs rose by more than 6% year-on-year in February. Although the sow kill fell, carcase weights were higher and this added to the increase in prime pigmeat production, having mostly subtracted from it in recent years.

GB household pork consumption volumes fell significantly compared to a year earlier at the beginning of 2015. In both the 4 weeks to February 1 and March 1, the volume retailed was down 5%. This was despite falling prices and suggests that demand for pork has been very sluggish. Indeed, households have consistently spent around 10% less than a year earlier buying pork since October. During February, the most expensive category, chops & steaks and the cheapest, shoulder roasts, both saw falling consumption despite lower prices. However, lower prices did appear to have underpinned an increase in leg roasts. The only category to see rising prices, loin roasting joints, had the largest decrease in consumption of nearly 20%.

During March, the EU average farmgate price for grade E pigs initially edged lower before steadying. This followed strong gains during February. At the end of March, prices averaged €1.41/kg dwt (103p/kg); 1.5% lower than in the final week of February. In recent weeks, prices have been trading at their highest levels since late October/early November.

Price changes across the major pig producing nations in March were generally either up 2-3% or down 3-4%. Denmark, Spain and France were in the former category while Belgium, Germany, Holland and Poland were in the latter.

Compared to a year earlier, pig producer prices were 10% lower on average. Countries falling closely in line with the average included Denmark, Germany, Holland and Poland. However, there were more significant declines of 13% and 20%, respectively, in France and Spain. In the UK, the euro terms decline was 5%.

UK pigmeat exports were 10% lower in January 2015 than 12 months before. Volumes totalled 15,400t, of which 14,400t was pork and the remaining 1,000t, bacon & ham. Pork exports were down 7.5% and bacon & ham sales fell 36%. Given a strong increase in domestic production, it seems likely that a surplus of supply over demand in the European market coupled with a stronger sterling held back UK exports.

However, this may not necessarily have been the case. Looking deeper into the trade statistics shows that the decline was mainly down to a sharp fall in sales to China and Hong Kong. By contrast, trade increased slightly with three of the four main EU buyers of UK pork – Denmark, Germany and Ireland. Adding in a decline in sales to Holland meant that sales to the main EU markets were only marginally lower.

Moving on to imports, the UK brought in 1% less pigmeat from overseas than it had in the opening month of 2014 as deliveries slipped to 48,500t. A 3% rise in imports of cured pigmeat to 19,800t was more than offset by a 3.5% decrease in deliveries of fresh and frozen pork to 28,700t. It seems likely that the combination of an expansion of domestic production and weak demand limited imports despite exchange rate movements and the wide availability of cheap pigmeat in the EU market.

Denmark and Holland, both grew sales of fresh and frozen pork to the UK in January when compared to a year earlier. However, this was more than offset by declines of around 3% from Belgium, 9% from Spain and 15% from France, Germany and Ireland.

In terms of bacon & ham, Holland delivered a quarter less but this was more than offset by increased arrivals from Denmark (26%) and Germany (15%).